One man's trash is another man's treasure. That's
especially true for Ava DeMarco and Robert Brandegee. The two young
entrepreneurs salvage discarded rubber inner tubes, bottle caps,
license plates, hubcaps and other throwaways to manufacture trendy
fashion accessories, which they sell through Little Earth
Productions Inc., the Pittsburgh-based business they founded in
1993.

The market for their unique offerings--beer-cap-studded belts
made from recycled rubber, backpacks decorated with car emblems,
gym bags accented with chrome hubcaps--is indeed hot among 18- to
35-year-old buyers who want a funky, upbeat look. In 1995, Little
Earth Productions grossed $1.9 million. The partners expect their
company to finish this year with $4 million in sales.

How did DeMarco and Brandegee know there was a niche in the
retail fashion industry for their offbeat eco-fashions? They
researched the market. "We had a gut feeling about recycled
fashion accessories, and the research we did confirmed our
instincts," explains DeMarco. "Before we invested a lot
of time and money, we wrote a business plan for our company, and
took a look at the market to make certain we were targeting the
right buyers and offering products they wanted and could
afford."

Every year, thousands of entrepreneurs face similar challenges.
Will my product sell? At what price? Who are my customers? Who is
my competition? Here are six essential steps to researching your
market in order to answer these key questions.

Probably the most important part of the market research puzzle
is figuring out who your customers are. What is their age, gender
and marital status? Do you know their income level and occupation?
Are they conservative, or trend-setters? Do they have political,
religious or environmental beliefs that will influence their
buying? Do they spend money freely and demand top quality, or do
they shop for bargains?

During the early days of their company, DeMarco and Brandegee
gathered concrete information for their buyer profile by personally
selling their products at Pittsburgh arts festivals. There, they
met and talked with customers, whom they learned were primarily in
their teens to mid-30s.

"It was a good way to watch people use our products,"
notes DeMarco. "We also got a lot of feedback on price, and
comments about how our products worked or didn't work for
them."

The partners also devised a simple survey tool to gather
additional customer information by attaching a small tag to every
product shipped to retail stores for sale. Purchasers were asked to
jot down answers to a brief list of questions and mail the
completed tags to the company. "We asked for their name and
address, general salary range, whether they're a student or
professional person, and why they bought our product,"
explains DeMarco. "We also wanted to know what other products
they buy, and what products they would like to see from
us."

Customer response has been helpful. "However, we're not
sure if the people who returned the tags were those who really
liked our product or those who had the time to return the tags. But
the tags gave us anecdotal information that helped. It confirmed
our feelings that our market consists of buyers in their teens to
mid-30s. We had a surprise, too: A number of buyers were older, in
their 40s and 50s."

Before opening their doors for business, DeMarco and Brandegee
examined competitive products on the market. They found their
competitors "were strongly skewed toward recycling, and
didn't focus on the style and function of the product,"
explains DeMarco. She reasoned that if Little Earth Productions
could come up with similar products that used better materials and
design, the company could have a greater impact on the market.
"We chose a different emphasis than our competitors," she
says. "We decided to focus primarily on the fashion--rather
than on the recycling--aspects of our products. This way, we could
not only get into the eco-stores, but also high-end commercial
stores like Nordstrom."

Gathering data about their competition was a fairly simple task.
The partners called various companies, requesting copies of their
catalogs and pricing sheets. They also checked newspapers and
magazines for information about their competitors'
activities.

To stay in business, you have to sell your product at a price
your customer is willing to pay. Your price also has to cover your
costs of doing business and allow for a profit. As DeMarco learned,
finding that happy medium isn't always easy. During the
company's early days, customers balked at the high price tags
of several products, including a backpack that sold for $130.

"We realized that high prices were going to limit us to
selling to a few select stores, but we didn't want that
exclusivity. We knew that as our volume increased, we could lower
our prices, which we've done over the past four years.
We're now at a price level where we give value to our customer
and give ourselves a profit margin," explains DeMarco, noting
that their backpack presently sells for $59.

A great way to find out how your product might be received is to
test-market it. The feedback you get will help you set your price,
adjust your marketing approach, and point out any necessary product
modifications. Jumping into the market without pre-testing your
product, DeMarco learned, can create problems. "When we first
started out, we used to design new products two weeks before a
trade show and hope people would buy them," she admits.
"We didn't know if people would like them or what they
would pay." The company has since changed its approach, and
now develops prototypes of new products, which are sent to a half
dozen retail stores for display and sale. "The feedback lets
us know if we're on the right track with a new product before
we invest more time and money," she adds.

There are several other ways to test-market your product, says
Joy Wake, former president of the Sacramento, California, Chapter
of the American Marketing Association. Some entrepreneurs develop a
series of standardized questions about their product, which they
use to interview prospective customers at shopping malls or other
busy retail areas. Others prefer to conduct a telephone survey. A
third option is a focus group, in which, typically, a small group
of people gather for a few hours to discuss your product, its price
and benefits, and your company's services. A team leader asks
questions and encourages group discussion, which can be taped for
further analysis. If you need help developing your questionnaire or
conducting a focus group, you might retain the services of a
professional market research group, or get free advice from your
local office of the Small Business Administration's (SBA)
Service Corps of Retired Executives (SCORE).

Aside from conducting your own research, suggests Wake, visit
your local public or university library, where you'll find a
wealth of information about consumer habits and spending patterns,
product pricing, industry trends, and general marketing
information. Federal government agencies, including the SBA, are
another excellent source of information, as are trade and business
associations, which often publish their own journals and industry
reports.

Market research requires a considerable amount of time, money
and energy, but is well worth the investment. "Good market
research helps minimize your costs of doing business," notes
DeMarco. "If you design a product, introduce it, and it fails,
you've lost time and money on that product--time and money you
could have spent on something else, so there's a double loss.
The sooner you can do your market research, the sooner you'll
guarantee yourself you've got your ladder leaned up against the
right wall. You'll have the right focus and be able to set your
company's long-term strategies."